A commentary on insurance coverage issues in Hawaii and beyond

May 19, 2008

Florida and Allstate Resolve Differences - For Now

In a prior post, we discussed Florida's ongoing investigation of Allstate's alleged collusion with other insurance companies to keep insurance rates artificially high. When Allstate failed to comply with a subpoena in January and testify about its property insurance business, it was suspended by Florida's Office of Insurance Regulation.

Allstate's appeal of the suspension order led in an interesting decision in Allstate Floridian Insurance Company v. Office of Insurance Regulation, Case No. 1D08-0275 (Fla. Ct. App. May 14, 2008) here. At the January hearing, Allstate produced thousands of documents, but labeled approximately 30,000 as "trade secret." Some of the "trade secret" documents were public records posted on the Insurance Commission's website. Many of the documents had pages removed. Most of the required documents were withheld. None of the Allstate witnesses were able to answer questions at the hearing regarding subjects required by subpoena.

The Court of Appeal agreed with the Insurance Commission that Allstate's actions posed an immediate danger to the public health, safety and welfare. First, Allstate's practices allegedly included arbitrarily reducing bodily injury claim payments by up to 20%. Second, Allstate allegedly was involved in ongoing criminal activity by failing to cooperate with the investigation. The Court of Appeal affirmed the suspension order, but left the door open for Allstate to unilaterally lift the suspension by producing the documents.

Two days after the Court of Appeal decision, Reuters reported here that Allstate submitted an affidavit certifying it had complied with Florida law by providing all documents requested in the investigation. Consequently, the Insurance Commissioner lifted the suspension, allowing Allstate to again issue new policies in the state.

Similar to Florida, Hawaii's Insurance Commissioner has broad powers to investigate insurers who fail to comply with state law. See Haw. Rev. Stat. 431.2-301.7.

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Florida and Allstate Resolve Differences - For Now

In a prior post, we discussed Florida's ongoing investigation of Allstate's alleged collusion with other insurance companies to keep insurance rates artificially high. When Allstate failed to comply with a subpoena in January and testify about its property insurance business, it was suspended by Florida's Office of Insurance Regulation.

Allstate's appeal of the suspension order led in an interesting decision in Allstate Floridian Insurance Company v. Office of Insurance Regulation, Case No. 1D08-0275 (Fla. Ct. App. May 14, 2008) here. At the January hearing, Allstate produced thousands of documents, but labeled approximately 30,000 as "trade secret." Some of the "trade secret" documents were public records posted on the Insurance Commission's website. Many of the documents had pages removed. Most of the required documents were withheld. None of the Allstate witnesses were able to answer questions at the hearing regarding subjects required by subpoena.

The Court of Appeal agreed with the Insurance Commission that Allstate's actions posed an immediate danger to the public health, safety and welfare. First, Allstate's practices allegedly included arbitrarily reducing bodily injury claim payments by up to 20%. Second, Allstate allegedly was involved in ongoing criminal activity by failing to cooperate with the investigation. The Court of Appeal affirmed the suspension order, but left the door open for Allstate to unilaterally lift the suspension by producing the documents.

Two days after the Court of Appeal decision, Reuters reported here that Allstate submitted an affidavit certifying it had complied with Florida law by providing all documents requested in the investigation. Consequently, the Insurance Commissioner lifted the suspension, allowing Allstate to again issue new policies in the state.

Similar to Florida, Hawaii's Insurance Commissioner has broad powers to investigate insurers who fail to comply with state law. See Haw. Rev. Stat. 431.2-301.7.